“Attorneys for McDonnells to meet with prosecutors as key phase opens in gifts probe”

The Washington Post on August 18, 2013 released the following:

“By Rosalind S. Helderman and Carol D. Leonnig

Attorneys for Virginia Gov. Robert F. McDonnell and his wife, Maureen, will spend Monday locked in separate hours-long meetings trying to convince federal prosecutors that the first couple should not be charged in the gifts scandal that has dominated state politics.

The meetings open a new, critical phase of the investigation, timed to help prosecutors decide over the next few weeks whether to file charges, according to two people with knowledge of the investigation.

Federal authorities have been investigating whether McDonnell (R) agreed to take official actions to aid nutritional supplement company Star Scientific while accepting hundreds of thousands of dollars in gifts and money from its chief executive, Jonnie R. Williams Sr.

The central issues for prosecutors are what precisely McDonnell may have said or offered to Williams on his own and how much the governor knew about his wife’s acceptance of gifts from Williams and her actions to help his company just as Star was launching a new product.

As the scandal has shined an uncomfortable spotlight on the governor’s marriage, McDonnell’s side has conveyed to authorities that his wife often purposely kept him in the dark about the largess she was accepting from Williams, according to a person familiar with the investigation.

Their goal with that assertion is to convince prosecutors that it would have been impossible for Williams’s gifts to have influenced the governor in his official duties because McDonnell learned of many only after his wife had accepted them.

Prosecutors will have to decide how credible they find those assertions when considered against the timeline of the first couple’s interactions with Williams and other evidence, including Williams’s recollections.

According to two people familiar with his version, Williams has countered the account from the governor’s side. He has told authorities that McDonnell frequently spoke with him about ways he and the state could help Star Scientific gain prestige and scientific endorsements for its new anti-inflammatory supplement. The two people and others spoke on the condition of anonymity because of the ongoing investigation.

Williams also has told investigators that the governor was aware of his gifts and thanked him for helping his family during a time of financial strain.

McDonnell has said he broke no laws, tried to comply with state financial disclosure rules and took no unusual actions to assist the struggling nutritional supplement company beyond what he would do for any Virginia company.

The pace of the investigation

The now fast-paced timeline of the investigation is driven in part by two factors.

First, prosecutors generally wish to move as quickly as possible if they think there is evidence of criminal actions by a sitting, still powerful elected official.

Second, Justice Department guidelines discourage prosecutors from taking action during an election season to avoid the perception that they are trying to influence the outcome.

According to those rules, prosecutors would find it more difficult to proceed against McDonnell after Labor Day, given that Virginians will go to the polls Nov. 5 to choose his successor.

The governor’s side has been pressing prosecutors to wait until after the election to conclude their investigation, but the U.S. attorney’s office has not shown any appetite to delay, the two people with knowledge of the probe said.

A spokesman for the U.S. attorney’s office declined to comment, as did Jerry W. Kilgore, an attorney for Williams. Rich Galen, a spokesman for the governor’s legal team, also declined to comment.

William Burck, an attorney for Maureen McDonnell, said that she genuinely believed in Star Scientific’s promise but that she never sought or asked Williams for anything and never agreed to help him or his company in exchange for gifts.

“Any suggestion to the contrary is false and belied by the facts,” he said. “Anything Jonnie Williams did for Mrs. McDonnell and her family was done solely out of friendship, at least that’s what she understood for her part. If Jonnie Williams is telling the government something different, it can only be because he’s willing to say anything to save himself from prosecution for other crimes.”

Just as the legal showdown is unfolding in Alexandria on Monday, McDonnell will be conducting one of the last major acts of his four-year term. He will be delivering an address to state lawmakers in Richmond on the health of Virginia’s finances.

While outgoing governors are typically welcomed warmly by members of both parties at the annual speech, lawmakers were bracing for an awkward scene as they greet a governor known to be at the center of an aggressive corruption probe.

Over a roughly 18-month span in 2011 and 2012, Williams gave $15,000 in clothing to Maureen McDonnell, a $6,500 Rolex watch he intended for the governor, $15,000 for catering at the wedding of one of McDonnell’s daughters and $10,000 as an engagement gift to another daughter.

Two people confirmed over the weekend that there were additional gifts, including golf clubs for each of the governor’s college-age twin sons and an iPhone for the first lady.

Most significant, in 2011 and 2012, Williams provided $120,000 to Maureen McDonnell and to a small holding company owned by the governor and his sister, money the governor has said were loans that he has now repaid. McDonnell also has offered a public apology for embarrassing the state and given back other “tangible” gifts Williams provided.

Competing accounts

A person familiar with the investigation said the governor’s team has told authorities that McDonnell did not know that Williams paid for a shopping trip for Maureen McDonnell at Bergdorf Goodman in New York City in spring 2011. They also have told prosecutors that he didn’t know it was Williams who bought the Rolex watch inscribed with the words “71st Governor of Virginia.”

The first lady gave the watch to the governor as a Christmas gift in December 2011.

A person with knowledge of the probe said the governor’s side contends that the first lady did not ask Williams for the watch and that McDonnell learned that Williams bought it only after he found out about the FBI investigation this year.

But in his account to authorities, Williams said that Maureen McDonnell requested that he help her get a Rolex watch for her husband, two people with knowledge of Williams’s account said. That request came on the same day that she arranged for him to meet with a top state health official about Star’s new product and the possibility of testing whether it would reduce health-care costs for Virginians, those people familiar with Williams’s account said.

The governor’s side also contends that he knew little of his wife’s decision to buy stock in Star — an investment that meant the McDonnell family held a personal stake in the company even as the couple took steps to promote it.

They say he learned of a $50,000 loan Williams made to his wife in May 2011, about two weeks after the money arrived, by which time it had been spent.

About $30,000 went to purchase Star stock intended for the McDonnell children and the rest to pay down debt.

McDonnell learned five months later, in November 2011, that the stock was in his wife’s name and had not been transferred to their children as she had indicated, according to someone familiar with the governor’s account.

By that time, the stock had plummeted in value and he urged her to sell. A month later, she did so, only to repurchase her shares, again without his knowledge, in January 2012, the person said.

The governor’s side says McDonnell did not know she had bought back the stock until nearly a year later, when in December 2012 the McDonnells agreed to disperse the shares among their five adult children. The current status of the stock is not clear, although McDonnell’s oldest daughter, Jeanine, said Sunday that she sold her shares in the spring. She declined to comment further.

There is no dispute that Williams and McDonnell personally discussed $70,000 the executive provided in 2012 to MoBo Real Estate Partners, a limited liability corporation McDonnell set up with his sister to manage two Virginia Beach rental properties they own.

But McDonnell has said that he made no promises to Williams in exchange for the money.

A state-funded lawyer appointed to represent the governor has conducted an audit showing that Star Scientific received no economic incentives, targeted budget appropriations, state contracts or appointments.

The most striking examples of assistance the couple provided the company came through the first lady, who flew to Florida within days of receiving Williams’s $50,000 check in 2011 and told a group of doctors and investors that she supported Star and believed its product could be used to lower health-care costs in Virginia. She also organized a luncheon at the governor’s mansion to mark the launch of Anatabloc, an event the company touted in a press release.

The governor’s side contends that his actions were far more limited. He attended the mansion event launching Anatabloc, but only briefly and at the urging of his wife.

He helped Williams get a meeting to pitch his product to Virginia Secretary of Health and Human Resources Bill Hazel, but he has said that kind of assistance to business leaders was not unusual.

“Throughout my administration, I have directed my cabinet on a regular basis to evaluate anybody that comes in,” he told reporters after an event in Alexandria last week. “We have thousands of meetings during the course of the year with my cabinet and with me and everybody. We try to give everybody a fair shake.””

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.